boy, has the tide turned on this company in terms of sentiment. with that, we'll send it back over to you, carl, for "squawk alley." thank you, it is 8:00 a.m. at intels headquarters in santa clara, california. 11:00 a.m. here on wall street. "squawk alley" is live. ♪ joining us this morning, john steinberg, ceo of the daily mail north america, john ford, kay kay kay kayla toush.

nearly $17 billion in cash after weeks of speculation about a to believe deal until casting the acquisition as a play for the computing market, and also the wave of connected gadgets called the internet of things. in fact, that phase, john, jon, i think it is in the third sentence. not something we typically associate with intel. >> this acquisition, should it go through of course is so interesting because of the times. i mean, if you think the brian was the right choice as ceo, this is a big part of the reason why. he's a guy who understands manufacturing of chips possibly better than anybody else on the planet, and he's trying to position intel for the next ten years, which many expect is going to be about chips going into all sorts of locations where they haven't been historically. into sensors, into cars that are trying to view the road and understand what's going on. and this technology of programmable semiconductors is going to be important to systems being able to understand on the fly what's happening, being able to adjust and get smarter over

time without having to put a whole different hardware solution into place. and also, this is a team, an executive team, relatively new, that exercised discipline in this case. altera bought at this price, intel backed away. shareholders have their say. this time it's going to work out. >> it's still paying for premium that's 56% above of where the stock was trading before the news broke. david citing 23 times, there does seem to be a worry that yes, brian and his team think this is the direction they're going in, but they are paying a very rich multiple to get there. >> they are. >> i think they have to make a bold move here. these field programmable things are allowing someone to tweak with the code before they put it into a server facility or something like that. already, ironically enough, in june, 2014, diane brian at intel said in a blog post by integrating fpga, with

processors, the intel processors, we estimate an additional 2x lithium performance for our customers. this is something they kind of dated before they married. they recognized it was a step change for their business and recognized they had to get in. look, intel's top line revenue is basically not growing. this adds $2 billion due by 2016, and it adds about 11 cents to the eps. >> nobody's got the vertical story to tell like intel does. they've invested in manufacturing across the world, particularly here in the u.s. they are number one in process technology, if they can make this work, they are better positioned to extract value from this acquisition than anybody else. >> for more wall street's response to the deal, let's bring in angelo, good morning to you. >> good morning. >> it does sound like the kind of deal that people that are encouraging intel to make, but we're sort of in this environment where people are watching leverage in the cable, does this strike you as

dangerous in any way or not? >> no. i mean, i think, you know, there are a number of reasons for the acquisition. i think, you know, definitely they needed to make a bold move, and you know, this is kind of a way from their home area which is pcs. if you look at the company here where they're really the growth progress has been in recent years has in data centers, altera helps them further penetrate in the data center. not only helps them kind of be very aggress tli, but it also helps them, you know, from a defensive perspective with, you know, potential, you know, entrants getting in. i think it's a good move. longer term, but you know, from a valuation perspective, it is a little pricey. >> so far this year, angelo, we have free scale, broadcom, and altera. is there any sense that a chip maker of any size is a target now? >> yeah, i mean, i'd say, if we sit here today, pretty much everybody is in play when it

comes to the semiconductor space unless you're intel or given the recent transaction they've made. from a potential, you know, target perspective, i say just about every one is in play, and erin's kind of looking at each other, but you know, if you're looking an attractiveness perspective. i'd say, you know, this is the place to be is still mobile and that's really kind of, i think where the, you know, potential takeovers kind of take place. >> angelo, what if anything do you read into the fact that on the call, brian said look, we're not looking to take altera's existing products and move them on to intel manufacturing and process technology, we are looking at the future. as we look at the value that intel expects to get from this deal, what does that tell you? >> yeah, i mean, i think it, you know, it kind of remains to be seen really. you know, how much intel can really get out of this. i think, you know, i think it is a bold move for them. i think it helps them kind of

really come out with some new product offerings in the data center space over the next couple of years. how successful they will be and how much value will extract for them, i think remains to be seen. but i think it's a good move on their end. >> yeah, i mean, i don't think they're buying a company, right? happened to be buying a company that's profitable. they're buying a technology which makes their chips go so much faster, but in their current industry, there's no growth. this seems to me almost like a facebook buying an oculous where they want to bolt it in to make it sustainable. >> sorry, go ahead. >> no, all i have to add is, you know, i think this is actually a very different acquisition from that we've seen, you know, in recent weeks and months in the semiconductor space where those appeared a little bit more scale-oriented and looking for earnings leverage where to the point, just reference, you know, we're looking at this for more of a technology acquisition perspective and more of a strategic type of acquisition. >> yeah, and in tv, it's a left turn.

sounds like what intel's doing. two-times, this is a big deal for intel, and of course, brian will be on closing bell tonight 4:00 p.m. eastern time. angelo, thanks so much. >> thanks for having me. next up, a big battle brewing between twitter's investors, notable vc fred wilson blogging over the weekend, sharing the comments at the code conference. and writing quote, i own a lot of twitter, and i'm a big fan, and dick, i do not plan to be critical of twitter in the coming months. that follows vc, chris saka saying he did plan on being more critical, despite his love of the company. he responded on twitter, fred wilson, thanks for the thinly-vailed slam on me. wait until i post something. thanks for selling me that twitter stock before the ipo. you're such a loyal investor. this is getting, i said it was delicious on the conference call this morning. you don't get this too often. >> this is normal. i mean you've got one activist

investor that wants to agitate for management change or some kind of change, we don't know exactly what saka will post. and you have another large investor that's backing them. this is like every day of the week on squawk box. >> but their debate is about what twitter should be telling the street it wants to be. that debate is -- >> i think the debate is that saka said he'll have critical extents about what they need to do, and wilson is saying, he's precisely not going to do that. there's further irony is that about a year ago, he put up a tweet thanking fred wilson and saying how influential it was to him and crafting investoring. everybody loves everybody, then everybody's fighting. >> i can't believe you called him an activist investor. but this reminds me of the phrase, a watched pot never boils. how can a company focus on the long-term goems when its own investors are going at each other every single day the company is defending itself? do you think john, this ultimately hurts the way the company is able to perform over the long-term? >> doesn't that basically happen in every company?

you look at apple, icon fighting with shareholders and dan lowe -- >> ebay. there's been a few. >> it seems common. this one is so close because it was private so short ago, now it's public. we're kind of creating a distinction between fights in public companies. >> the weird thing about this one to me, we don't even know with chris saka is going to say. he said in his big lead up, i still love twitter, you know, i'm behind the company, he didn't even suggest that he was going to necessarily go after dick cast lows specifically, so you know, there's this fight happening on twitter which is meta, social media gazing perhaps, it's not clear, except maybe some level of offense. i don't know. >> i think, revolvers around the metric they are going to tell wall street to to focus on. right? it's been mau's for a long time. he talks about the tweets viewed in syndication. those that are viewed even to

those not logged on versus those that are. what is the measure of whether twitter is successful or not? that's the issue. >> saka will come out with a laundry list. people, one of our analysis friends tweeted out, hey, when are you going to post this list? it's memorial, the only thing more important than twitter is family and friends. now he's late on this thing already. he was supposed to drop this bomb shell last week. hopefully it'll come this week. >> i'm sure he's listening right now, hi chris. we'll talk to you soon. >> before you go, you were interested in the story about drones. enrique iglesias caught up in drone photography over the weekend. he grabbed a throne, he cut his hand. bleeding pretty badly. he was able to finish the show and received medical treatment, but look, this is an issue that the industry's dealing with to a large, large degree. >> this plays to the point i've been making. he was with a dee jay inspire one. that was the type of drone. i fly a dji phantom first

generation. i cut my mother's finger with the drone. not badly, but she got cut when she went too close to it. the issue is the amateurs. as i've said for many many times, amateurs need to be trained. we don't need to worry about a.m. zone flying drones, they're going to be operating in a strict manner. we need to worry about these things out over the place. i shouldn't have been flying in a courtyard. i've learned not to do this. the amateurs are the problem. >> flying lawn mowers is what people caught them. >> i was queasy of that. but you can see, it's gushing blood, but do you think there needs to be some sort of guidelines? any rules of the road? >> i think there do. there needs to be clear guidelines, municipal, community, where you fly, how you operate, and there needs to be training and better safety things. if you grab one of the blades, you can really hurt your hand. >> john, good see you. >> i'll fly safely. >> i will. let's get a check in on the markets right now.

rally had lost a little bit of stream. hasn't been up z ach as 92 points to kick off the first trading day. seasonally, it has been a weak month, we are seeing green today, s&p up by just about three points the nasdaq up by six points as well. meanwhile, cisco announcing a shift. rob lloyd and gary moore are those presidents leaving. it follows chuck robins being named the next ceo of the company saying he will announce a new leadership structure later this month. cisco shares down about half of 1%. and a number of stocks trading at new all-time highs. ebay, starbucks, mondelez going back to kraft in 2001, the leaders of course on that big chip deal. when we come back, far ma a top formaler. ian reid will join us in an interview here. netflix on a terror in may and 2015. can that momentum continue? few big moments ahead for the

company later this month. and home security start-up that sends hd quality live video of your house to your phone, 24/7, just raised 30 million in new finding. the ceo will join us when "squawk alley" continues.

cancer conference under way in chicago. news coming out of that today. let's get to an exclusive

interview. pfizer ceo sitting down with cnbc, hey meg. >> hey. we have ian reed joining us, thank you. >> pleasure being here. >> you don't normally come, but you have come this year. what does that signal for the importance of cancer? >> this is almost the coming of age of pfizer's oncology. we're investing for quite a few years now in oncology. we have hugely important abstracts here and a wide range of abstracts. we're presenting paloma, i'll come back to that in a moment. we have our peo1. we have our own oncology 41bb. we have a third generation. and we have antibodies for cancer. and we have a similar. we're presenting across a really broad range and the important part is more important, immediately, is the paloma free data. >> you just launched earlier in

february, earlier than expected. how is that launch and what does the data do for the launch of the product? >> it was a phase two trial. it was approved on that. and it was for women with estrogen positive breast cancer who had not been treated with the care before. and it was approved on that. now, this trial that we've stopped early, and we're presenting today or presented this morning, it's called paloma 3. this is the women that have been treated with estrogen before and the cancer has returned. particularly aggressive type of cancer. and with this trial by adding them, we more than doubled the survival rate. so it's really exciting for women in this situation. really important. as the product, we launched in the first quarter and since then, we have taken our market share from 0 to 20% in first line. we've doubled the number of parkts, doubled the numbers of physicians prescribing. so the launch is going well which means it's being well

received by physicians. i mean, an important thing about our brands is not only effective, but it's, in terms of oncology treatment, well-tolerated. that's a big, important attribute of the drug. >> i want to ask you about drug prices. its been a huge topic here obviously. how are you thinking about especially as more and more are tested in combination? >> you are to look at drug prices. especially for patients. so we believe that the way to deal with this is is that patients should have good, quality insurance with low co-pays. when they don't have good insurance or no insurance, pfizer and most of the industry stands ready to provide our drugs at no cost or very little cost. but in reality, the real question is, is society willing to continue to support innovation? and i think it's a key issue around enkolg. we declared a wor on oncology

with richard nixon. we're on the verge of major breakthroughs. this is not the time to pull back on the pace of innovation. i feel strongly that the value of the industry's added is huge. there was a publication in 2010 on oncology treatment from '88 to 2000, 23 million lives were saved by oncology treatment, and the benefit to society was 80% compared to 20% to the drug developers. so clearly, it's providing benefit to society. >> you do see pushback in areas like hepatitis c, a lot of pushback, even though they mark tremendous advance on what's going on in the disease. do you see a similar thing in cancer that they'll be combination therapies and more competition comes on the market? will that change the dynamics? >> it will, that's why competition is so great to have so many companies. i mean we have five now on

oncology. p 1, ups 40, ccr 2, this is competition. that is what the marketplace does. so more, more competition, more products with, more combinations, more benefits for patients. >> last question, how is business development right now? big deal, small deal? >> continuing to look at any deals that will add value. >> moving overseas? >> any deal that is pfizer shareholders. that's what we're looking at. >> ian reed, thank you very much. >> kayla, back to you. ian reid of pfizer, thanks. new round of founding for canary. a single device to keep your home safe. plus a new report on the government subsidies behind the success. when "squawk alley" returns. ♪ every auto insurance policy has a number.

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canary has just closed a $30 million round of funding. with their pockets already in the shelves of best buy, home depot, and verizon, let's look at how the technology to secure the home. adam is ceo of canary, joins us live here at post nine, adam, thanks for joining us. >> thanks for having me. >> i've tracked you guys far while, couple years now. looks like the device has got an bit smaller. number of different sensors in here. temperature i believe, you can tell if the temperature in the house is spiking quickly. maybe there's a fire, camera of course. tell me, how are people using this device today? >> from the start, it's just been about bringing security to the masses. dmoktizing the security. and so we've really seen people that have never had access to security before, apartment renters, people that just don't want to pay the ridiculous prices for security. from both the u.s. and, you

know, over 70 countries that we've sold the device to so far have access to it now for the first time. sop it's really a watching your home, family, pets even from anywhere. >> one of the greats is that it's actually too sensitive. that's what critics say, your cat walks by, and you get a million notifications. how do you work to tailor those to each user to make sure that the experience is one that's actually meaningful to them? >> that's a great question. so we have learning algorithms in the device and in the cloud that it starts to learn your behaviors over time to get smarter in your own home. so when you have it in the beginning, it'll be the most sensitive, and over the coming weeks and even months, it'll continue to learn, continue to learn, and just become better and better over time. >> adam, we were talking a couple years ago, you were being very careful about how you were taking in funds from investors and from various sources. >> right. >> from kick starter, et cetera. there's a time to do a kick

starter campaign, not immediately necessary, once you already have a product that's working, why is now the time to take on $30 million in vc funding and who are the investors? why did you go with them? >> well, leaving our round series b was walden riverwood, and they led many multiple rounds in gopro and other companies that are, you know, similar to us in many ways. and they were really the right departments to bring on. of course our investors have joined in this round as well. we've been careful from the beginning to, you know, not just bring on money, but bring all the right partners. who do we want to work with? who do we want sending around the board room? that can help us grow internationally. >> are you leveraged to household creation which hasn't been that hot the last couple of years. >> you know, we've, we look at all opportunities and channels.

you know, we've, we are approached by everyone, but right now, or just hyperfocus on what we're doing, and on growing deliberately in the retail channel, retail market. >> we have the coo of adt on a couple weeks ago. he was talking about moving into this space, not just doing the big home that's connected with the pricey service behind it, but the do-it-yourself like canary, why shouldn't you be worried about that big name in this space trying to get exactly where you are? >> its been great. we invented a new category of security. so this all in one security product, we were the first to ever conceive of that. there are big companies entering the space. i think it's great, the leverage, marketing dollars. it's very different from the traditional model. and we, we know we'll win and we'll dominate. a lot is the focus on quality, design, and on security from the beginning. >> what's the best room in the house to put that in?

>> best room for an apartment is central area. so if a living room or entry way. and that can see a lot of comings and goingings, you really need one. if off larger home, might need two or three and spread them around, one per floor, spread them around the floor. >> ceo of canary, $30 million. thanks. >> thanks. let's count you down to the close of the u.k., europe will have a few moments. volatile for stocks over there. pmi was up slightly in may just shy of forecast as a friday deadline looms for greece. goldman's chief european economists put out a note saying that greece may need to default in order to break the impasse in its talks with creditors. they owe about 300 million euros as the fifth. comes after yesterday's in the french newspaper. he accused creditors of submitting absurd proposals in his words, but according to a german government spokesman, a sunday phone call between chancellor merkel, elon, it was

quote, constructive. we will see how constructive in the next few days. when we come back, netflix on a terror this year. stock's up over 80%. can it continue through the release of some new shows this summer? "squawk alley's" back in a minute.

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herrara. the iraqi military releasing video showing iraqi and shiite soldiers showing them fighting militants. city the is the site of a key oil refinery which produced about a third of iraq's domestic fuel supplies. lindsey graham just announcing his bid for the republican presidential nomination. known for his hawkish policy views. he is the ninth to declare for the white house. top executive of net jets stepped down amid ast dispute with the pilot's union. he will be replaced by adam johnson who leflt a month ago. this is a unit of warren buffett's halfway. here's your inspirational story of the week, perhaps the month. a two-time cancer survivor has become the oldest woman ever to complete a marathon. harriet thompson of charlotte, north carolina, ran the marathon in seven hours and 25 minutes. she was running for cancer victims, including her son who

was recently diagnosed with the disease. what a great story, that is our update this hour. let's get back to "squawk alley". thank you, sue. shares of netflix up more than 80 incompetent year, and touching a fresh-all-time high on friday. but the question is will investors cool off on netflix as we head into the summer? barton kroskt is an analyst, good to see you this morning. >> happy to be here. >> safe to say there's a product redesign, orange is the new black coming out, and you have this continued ramp of original programming, what's going to move the needle? >> i think for netflix, the secular tide is in their favor. you know, what we're finding is that consumers are liking netflix as much or more than they liked tv. they're becoming more comfortable with using streaming, and i think that that gives netflix the opportunity to

grow subscribers in the u.s. and to get more money out of subscribers in the u.s., and i think that's a secular theme that goes beyond the vagaries of particular episodes and any particular product we design. they are on the right side of a big secular change. >> they're grabbing about 37% of internet traffic, statistic that the washington post picked up, but, at what point do we start to worry that the model is getting saturated? that subscribers can't grow that much more, there's not that much more free time for users to spend on netflix, and that they're costs are going up. when does that happen? >> well, i think that for netflix, you have tremendous leverage in this model. i think there's a lot of roadway, a lot of ramp ahead of them. you know, each million subscribers bring about $100 million of contribution cash flow, you know, on constant expenses. and those subscribers are not tied to any particular show. netflix is spending more on content than most major internet

networks, more than hbo. consumers are liking that consent as much or more than any other tv network out there. it's a scale, they don't have to grow their content span. each dollar they add and way below the cost of tv, adds over $700 million of cash flow to the bottom line. you know, they are strong in the u.s., but just beginning their ramp internationally. the opportunity internationally is a moult. of the united states. you look at these together, for 29, 30 billion a change market-capped company versus giants, and the tv industry that are multiples without a market capsize. there's a lot of market opportunity that keeps people interested, that moves netflix closer to the price topic. >> some of the bears are vocal as you know. argue that cash flow still comes from the dvd business which is sort of a dead end, long-term. some even say that they put some streaming expenses arbitrarily into international p and l trying to make the domestic margins look better. are those to be believed?

>> you know, i think that that that's a lot of kind gnatering negativism as a speech writer once said. those are not material issues. this is a company, you know, that has tremendous leverage as they grow subscribers. as it lot of commuters love, a lot of room to get more pricing over time. and it's not the right side of consumer behavior in terms of home entertainment. you know, so can you try and pick and chew at the accounting for allocation of original content between domestic and international, yeah, but that doesn't amount to much. the dvd business is a business that is contributing a minority of cash flow at this point. and it is something where off lot of loyalty among consumers using it for years. it's not going anywhere. it's declining slowly, but it is declining. the stories, that's where the investor base is interested, and that's where i think the consumer's interested, and i think that that supports the stock and that's more important than the criticisms you point out. >> barton, there are a lot of things that an investor could get excited about heading into

the back half of the year. apple's going to have new iphones, disney's got a bunch of great movies come out, all three of them, including netflix, are near all-time highs. why should we think that the excitement should continue to be behind netflix versus some other places where investors could put their money? >> okay. well, i think that for netflix, again, it's the power in the model. it's the earnings leverage they get on all the subscribers they add. it's the ability to price more, it's the fact they're in the early days of international. it's the idea that this has not fully discounted in the stock, i think even here. you know, so i'm arguing this should be a 900 dollar stock in a year. with the type of contribution margins they have, and the way they're executing, you know, you can argue for more beyond that. you know, so i think that companies that are well-positioned, you know, on the side of a big secular change like this, you know, it's hard for people to fully understand and see around the corner and see the type of impact and leverage that they can have in a market that is this large. you know, so i think that

there's a lot of revelation to come to people with, you know, how powerful netflix will be over over the next few years. that's a great argument for owning a stock here even after the great run. >> barton, there are a lot of analysts, who like you, see power in the model, and that's led them to raise their price targets, but only going into the mid-700s. why do you feel confident enough to stick your neck out to be the high on the street at 900? >> well, you know, i'd argue that i'm at 900. i've seen investors and fully reported kind of idea pitch scenarios pitch for, you know, price targets well above where i am. but, you know, i would say that the leverage in the model gives me a lot of confidence. the consumer love of the business gives me a lot of confidence. and the international, the ability, the way these guys have executed and the opportunity there, gives me confidence that they can grow the top line, and that the expenses don't have to match that one for one. a lot drop to the bottom line over the next several years. >> we will certainly see. june will be a busy month.

we appreciate your time this morning. >> great, thank you. >> barton crockett from fdr. when we come back, the benefit that elon musk gets from subsidies getting a lot of attention this morning. what other companies are the biggest recipients, we'll talk about that. first, rick santelli, what are you watching today? >> well, couple bits of decent data, and we're back to unchanged on the year for tens, around 216, 27217. we're going to talk about than. euro verse the dollar, most important, we're going to talk about models right after the break.

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way to print. hp instant ink. china stock's up 50% this year and a possible new way for you to invest there. unless of course you think there's a giant bubble brewing. and bull or bullseye? we debate the biggest calls on the street today. did the analysts get them right or wrong? we will decide. carl, see you in about 15. >> sounds good, scott, thanks. elon musk's growing empire fueled by 4.9 billion in government subsidy twhabs report from the l.a. times this morning. iowa man jabbers is in washington digging into the other big names getting those subsidies, hey adam. >> you're right. a lot of attention focussed on elon musk today. he might be focussed on the new, new thing, but the company is focussed on tax breaks and government subsidies as a old

relationship between government and american corporations. the libertarian institute estimates that the federal government spent almost $100 billion on direct and indirect subsidies to american businesses in 2012 alone. and one of the biggest industries receiving those subsidies is agriculture as the usda handed out more than $25 billion in what the institute called corporate welfare that year. in march, left leaning group called good jobs first looked at the big recipients of grants and tax breaks finding that four companies have been most successful at landing subsidies from bailouts. those companies, boeing $78 billion, ford at $30 billion, gm at $54 billion, and jp morgan with a whooping $1.3 trillion. now all those numbers are huge. what they can take into account is the value the companies get from regulatory changes which has or it extraordinary and the value they get just from been

located in the united states with its peace, stability, and rule of law. the time frames for all numbers, are over a decade or more. so these are not annual numbers. and in the case of many of the companies, especially jpmorgan, they capture the cost of the financial bailout as well. obviously, that was at least hopefully is one-time on thing, carl. >> let's hope so. aman jabbers in washington, thanks a lot. let's get to the santelli exchange with rick. hey rick. >> good morning, carl. you know today's a very important day. now we all understand that growth and productivity aren't doing the trick, wages have been stubborn, not so the upside, but not going higher to the upside. but yet, today, we see some data points that give us some optimism. we see the income jumped, but spending didn't. now income jumping isn't a bad thing. remember we live in a consumption economy. most geared to create more consumption. unfortunately it's geared to create a lot of consumption

through debt and we see how the world ended up. with specific markets in mind, the data points today, especially construction spending, that was well over 2%. that was a wild one. we're getting close to on change on the year, we settled around 217, once we traded under 224, which happened at double top in terms of yields, and then we settled under 216, 17, we never looked back, this is very significant also. look at the chart of the dollar index today and how it responded to stronger data, why? because the world-led trades foreign exchange. that's at the epicenter. no real interest rate without foreign exchange. they're all one game, and the dollar index, look at its marked improvement. let's switch gears and show a march chart. also, a technically easy trade in certain ways because once this market moved out of its 110 to 115 range and you see the left side, all tops at ten. a week ago friday was the settlement the year over dollar

under 110. once it did, hasn't settled back. today work under 109. that's the trade that keeps an eye on. now let's switch gears a bit. i'd like to read something that boston fed president eric rosengrin said recently, put it on the screen. and this is in regard to what's going on with the economy, it is possible at the economy will not be as robust as many economic models would suggest. because the models do not take into account this behavioral change. and the behavioral change he was talking about is, is that the models aren't doing it because humans seem to be holding on, there's lingering behavior issues as a result of the great recession. duh. how many surveys and studies have we seen on the depression? most flawed. it's a one-off statistical sample, what conclusions can you draw? there's one big conclusion we should never overlook. any of your viewers throughout, and i'm sure many of you have talked to grandparents or

parents with regard to how it was growing up in the depression, and how people didn't trust banks and institutions for generations afterwards. models are flawed because they can't model human behavior. many models are flawed. when i was young, climate, excuse me, population was supposed to be off the charts in the '80s and '90s. they were flawed. climate change models, we could argue about the potential flaws there, but one thing is certain, when it comes to human behavior, you're not going to if i can up on the models and federal reserve members would do themselves well to understand that there's a lot of changes that have gone on between many consumers ear's after the great recession and zero interest rate policy is not stemming. some of the issues that have resulted from that turbulent time. kayla, back to you. >> rick san tellfully chicago, rick, thanks. coming up, storing more data in an even smaller space. giant leap forward for reducing the size of file storage.

2014 cnbc disrupter will join us on "squawk alley," coming up next. you are looking at two airplane fuel gauges. can you spot the difference? no? you can't see that? alright, let's take a look. the one on the right just used 1% less fuel than the one on the left. now, to an airline, a 1% difference could save enough fuel to power hundreds of flights around the world. hey, look at that. pyramids. so you see, two things that are exactly the same have never been more different. ge software. get connected. get insights. get optimized.

welcome back. pure storage was on the cnbc disrupter list last year, and it's launching a new technology today called flash ray. and we've got the ceo here with

us. this flash array technology going to reduce the data storage size from the size of four refrigerators down to the size of a small microwave. that's an impressive size change, but look, i mean, the battlefield is littered with flash storage companies that try to move into hardware. fusion io on facebook as a customer, still had to get acquired, violent memories trading below the ipo price. why is your story going to be different? >> let me start by setting the stage. you know, storage is obviously a big business. north of $20 billion spent per year. the dominant tep is still the mechanical hard drive as its been for 50 years ago. a fie years ago, companies like google, facebook, and apple started moving their data to flash memory because they could innovate and deliver better customer experience. pure was founded to make flash available to every business. and we did so by making it cost effective and compatible out of

the box. and that was not something that our fore bearers were able to accomplish. so we ended up with a far more innovative product because it combined software and hardware. >> traditionally, you thought of flash storage as something you use when you need really fast access to the data when performance is really important, it's cooler, it's more power firkt, but its been more expensive. is that changing in some way? what is the techno logically that you can make the equation work out better for you? >> it is changing. it is changing profoundly. flash memory is on a curve which means it gets better, cheaper, and faster every year. mechanical doesn't. we've seen profound changeups. our customers are now getting storage below the price point that they used to. and they're saving a lot of money in the business operations. we've had companies save north of $15 million on a $500,000 storage purchase and consolidation. so, you know, doing a little

show and tell, we actually brought the box in with us today. you know, we couldn't bring the competitive offerings in because they're the size of sub-zero refrigerators. you see this little microwave that replaces three of those subzero refrigerators, it takes a lot less space obviously, but less power. we're talking about used to take ten homes, the power required to power ten homes, that's down to a toaster oven. and this will run circles. 20 times faster than the alternative technology. >> that's a drastic change when you think about it, going from the size and speed to your prior product to the size and speed of the one we were just showing you. how can you convince customers that they know or they have a line of sight into what you'll be offering them in just a few years? >> i think customers are very savvy. seeing is believing. most all of our customers try the technology out before they buy it. in fact, most people, customers say our value proposition is too good to be true. that's why we offer a money-back garn teen and front the cost of

them trying the technology to see the impact in their environment. >> what's the average customer size? they buy one, buy 20, 50 of these things? >> ranges up and down. we have small businesses like sierra nevada brewing that run a small footprint, then larger customers like linkedin. data store on the pure. >> talk about the business model. i believe that shifting a little bit too. you're making money in some new ways. how are you going to do it? >> you know, the big problem in the way storage is currently sold is customers have to re-buy the same storage over and over again. venders sell them, move the subzeros out, move in new, and you're writing off the same software you're buying. we came up with a model for evergreen storage that's more like a subscription business. you get a hardware and software subscription, the data stays in place and we'll upgrade your hardware and software to you can stay on the latest relief. >> and how do you do that keeping your costs in line? what are you doing on the back

end so you can turn that over and be reliable? >> it really required some innovation and hardware. that's what you're seeing today. this modular hardware that allows us to sub in without changing the data storage. and we've also been innovating in in software to make this feasible. >> reuters reported, you're eyes an ipo, you have fidelity, wellington, a lot of companies going public would kill to have them invest, why do you still want to the go public? >> oh, i've got to stay away from the topic of ipo, but you know, say we were gratified, they were led by public market funds. fidelity, wellington, and its been great to have them invested in the business. and you know, for us to get a chance to learn and interact with public market investors over the last two years. >> all right. the ceo of pure storage. exciting to see something shrink. >> thank you. when we come back, disney taking a page out of uber's

playbook, but can surge pricing work for theme parks? that discussion in just a moment. there's some facts about

seaworld we'd like you to know. we don't collect killer whales from the wild. and haven't for 35 years. with the hightest standard of animal care in the world, our whales are healthy. they're thriving. i wouldn't work here if they weren't. and government research shows they live just as long as whales in the wild. caring for these whales, we have a great responsibility to get that right. and we take it very seriously. because we love them. and we know you love them too. seven out of ten power outages in the us are caused by weather. but utilities can now predict where the power will go out, within a few city blocks. working with ibm, they're combining micro weather forecasts with detailed data from local sensors. to predict where outages are likely to occur. and send crews exactly where they're needed, when they're needed. ibm analytics from the internet of things

is making energy smarter every day. welcome back to "squawk alley." i'm morgan brennan with this

market flash. molycorp down 17% in trading. missing a $32.5 million interest payment on its senior secured notes. due today, saying it'll take advantage of the 30-day grace period. the missed payment heightened concerns that the company could file for bankruptcy before the end of the month, back over to you. a disney pulling an uber, disney is weighing a surge ticket pricing model for its theme parks which would include higher costs for peak park times. disney reportedly surveyed customers on how they would react to pricing on three levels, gold, silver, and bronze. currently they offer discounts for those stay ugh multiple days and children under age 10. certainly the stock, which is up almost a percent today doesn't mind that kind of talk. it would be interesting as disneyland is about to stage its 60th anniversary. >> yeah, the pricing is between $99 and $115. while we may call it surge pricing, it's not like uber

saying it's going to be four times more expensive. >> it costs a lot of money though. they've got to keep it simple. however they pull this off. somebody who spent plenty of money at disney theme parks already, and will spend more, they have to keep it simple. >> that does for us here on "squawk alley," let's get over to headquarters as we hit noon. wapner and the half. ♪ thanks so much, welcome to the halftime show. let's meet our starting lineup, joe is here along with steven and with us for the hour is this lady, she's the head of u.s. equity strategy at bank of america. pete, along in just a few moments as well. our game plan today looks like this. biotech buyer beware. where mark travis says to stay away from the high flying sector. why one firm sayss